What Funds To Buy For Your Couch Potato Portfolio

One of the best places to buy funds at is Vanguard because of the extremely low fees (on average about .21%, which is $2.10 per $1,000) and high quality funds. Plus, if you open a Vanguard account, there are no fees when you trade, so you can save quite a bit of money over time.

Here is what I suggested in my last post for your Couch Potato Portfolio:

                                   Name                                             Percent of Portfolio
                                   S&P 500                                                   13%
                                   U.S. Value                                                20%
                                   U.S. Small Cap                                         12%
                                   U.S. Small Cap Value                                10%
                                   U.S. Midcap                                             10%
                                   Total International                                   25%
                                   Emerging Markets                                     5%
                                   REIT                                                         5%

Now here are the exact funds from Vanguard that I recommend:

S&P 500 - Vanguard S&P 500 ETF (VOO) 
U.S. Value - Vanguard Value ETF (VTV)
U.S. Small Cap - Vanguard Small-Cap ETF (VB)
U.S. Small Cap Value - Vanguard Small-Cap Value ETF (VBR)
U.S. Midcap - Vanguard Mid-Cap ETF (VO)
Total International - Vanguard Total International Stock ETF (VXUS)
Emerging Markets - Vanguard MSCI Emerging Markets ETF (VWO)
REIT - Vanguard REIT ETF (VNQ)

*ETF's have no minimum money requirement to invest, as opposed to most mutual funds which make you invest at least a few thousand dollars to start in each fund (which is money most of us don't have).

The most important thing is that after you buy this portfolio, you need to leave it alone! When I say leave it alone, I mean don't buy and sell funds just because something bad happened in the news because you are thinking on such a short-term basis. Remember, this portfolio is for the long hall (30+ years), and what happens on a single day or two is not going to matter in the grand scheme of things. It is impossible to consistently time (and beat) the market, so don't even try (or you will lose lots of money!). The only thing that you can and should do is add money to these funds through a method called Dollar-Cost Averaging (DCA). For this technique, you buy a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are purchased when prices are high. This is a good technique because it takes some of the emotion out of investing.

So again, buy this portfolio, or one very similar to it, and leave it alone until you retire. You will thank me when everyone else is stressing about retirement.